Mergers & Acquisitions has, quite rightly, got itself a poor reputation. According to a Harvard Study 70-90% of M&A are failures. Savings are not made, value is not created and talent leaves in droves. So prevalent is this situation it is known in the trade as ‘M&A indigestion’. And yet, investors clamour for it and companies continue to pour time, money and resources into trying to make it work.
At MBH Corporation PLC (M8H.GR / MBHCF) our entire business is built on acquiring small businesses and yet our lack of traditional ‘merging’ often causes confusion amongst investors. We allow each of the businesses in our group to run independently. We do not force them to change the systems and processes that have served them so well for many years. We do not suggest that our culture or our way of doing things is better than theirs, and we do not decide that spending a fortune on rebranding consultants will in someway serve their clients better.
Unless you are an entrepreneur, a creator of jobs, a business owner it is perhaps hard to understand how appealing it is to be allowed to continue to create value the way you always have, but appealing it is and it leads to over 1,000 companies a year approaching us to join our group. We successfully filter them down to around 12 or more a year that we deem a good enough fit to come and join us for the long term.
But what about the synergies?!
This is the cry of the person who has read about synergies in text books, but has never tried to implement them in real life! It is also what leads to the high failure rate of M&A.
Yet, there is real value in bringing smart entrepreneurs together. Put 10 or 50 or 100 smart, successful entrepreneurs in a room together who all have a vested interest in the success of each other and you will see how quickly they share best practice, good leads, and ideas of how they can work together. New products are created, joint ventures started, markets entered. Not because of any grand design or vision from the Boardroom but because an environment is created that allows and rewards those who choose to do so.
On average, with every company that joins we add another 30+ years of ownership experience. Each company brings with it new clients, new partnerships, new experiences and new opportunities. For the small business owner on the outside wondering how to take their business to the next level, with every acquisition the MBH does, the group becomes more robust, more appealing and with more resources to tap into. A company in a different industry or a different country can often offer far more than a similar company from your own neighbourhood.
Successful cities attract great businesses not by forcing every company to look and act the same, but by providing the infrastructure that allow multiple types of businesses to thrive. Some will choose to avail themselves of all the infrastructure, others will pick and choose, for some just being around success is enough to drive them even further. Our job at MBH is to create that environment that continues to attract great small businesses to join us.
2+2 may not create 5, but put enough smart entrepreneurs in the right environment and the results can rapidly go exponential.